The one-off turnaround bonus will be worth up to 5% of staff’s salary if sales and profit targets are reached this year.
The potential payout in shares that staff would be able to cash in immediately is part of chief executive Dave Lewis’ effort to get the company back on track after a slump in profits and sales as well as an accounting scandal which led to a profits mis-statement of more than £263m.
Tesco is attempting to fight back against fast expanding discount chains Aldi and Lidl as it deals with a drop in food commodity prices and changing shopper habits, with sales shifting away from large supermarkets and towards the internet and small local shops.
Staff from checkout operators to managers were offered the turnaround bonus by Mr Lewis in January as part of a new deal that included renegotiating pension arrangements. He is battling to improve morale after cutting nearly 5,000 head office and UK store management jobs as well as more than 4,000 roles overseas and at the group’s banking division.
The company released details of the turnaround bonus on Friday, after negotiations with shopworkers’ union Usdaw. Tesco is still in talks over further details of a new pay deal for employees, which it has said will involve giving more flexibility on benefits such as a staff discount.